The authors acknowledge the helpful comments and clarifications received from the Secretariat of the World Trade Organization.

Transcription

1 Acknowledgements The authors acknowledge the following individuals who contributed comments and constructive suggestions to the review of this document: D. G. Barboza (Law Firm of Neviani, Borges & Beildeck, Rio de Janeiro); P. Chirac (pharmacist, la revue Prescrire, Paris); C. Correa (Professor at the University of Buenos Aires); M. Haubert (Director of the Institute of Study on Economic and Social Development at the University of Paris I); B. Remiche (Professor at the University of Louvain); as well as F.S. Antezana (Former Deputy Director-General, WHO), and P. Brudon, D. Fresle, H.V. Hogerzeil, J.D. Quick and T. Sodogandji, from the Action Programme on Essential Drugs, WHO. The authors acknowledge the helpful comments and clarifications received from the Secretariat of the World Trade Organization. The interest expressed by Member States, multilateral organizations and nongovernmental organizations (NGOs) is also acknowledged. Note to the reader This document represents an introduction to the issue and one of many contributions to the on-going process of analysing the pharmaceutical and public health implications of relevant international agreements, including trade agreements. The main text of this revised version of Globalization and access to drugs incorporates the helpful comments and clarifications received from the Secretariat of the World Trade Organization. The views expressed are solely the responsibility of the authors as with all WHO documents by named authors. This revision also contains speeches which were presented at the WHO Executive Board ad hoc working group on the Revised Drug Strategy, held in Geneva on 13 October The section on definitions and terminology has been updated. The bibliography and other reference material remain as in the original. First edition November 1997 Second edition January 1999 World Health Organization 1999 This document is not a formal publication of the World Health Organization (WHO), and all rights are reserved by the Organization. The document may, however, be freely reviewed, abstracted, reproduced and translated, in part or in whole, but not for sale nor for use in conjunction with commercial purposes. The views expressed in documents by named authors are solely the responsibility of those authors.

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3 Table of contents Table of contents Abbreviations and acronyms...iii PART I. GLOBALIZATION AND ACCESS TO DRUG: IMPLICATIONS OF THE WTO/TRIPS AGREEMENT:...1 Executive summary...3 Introduction Brief historical background to the international trading system The simultaneous creation of the GATT, the IMF and the World Bank The objectives, nature and functioning of the GATT Objectives...10 Nature...10 Obligations of the contracting parties...10 The "Rounds" The Uruguay Round and the creation of the WTO The new global economic environment...11 Long and difficult negotiations...11 The results of the Uruguay Round: strengthening and enlargement of the multilateral trade system...12 How does the WTO differ from the GATT? The protection of intellectual property rights before the WTO Reading the TRIPS Agreement from the perspective of access to drugs General presentation of the Agreement Fundamental principles and objectives of the Agreement: the necessary balance between intellectual property and accessibility Patents for pharmaceutical products and processes available all over the world Non-patentable inventions: biotechnology inventions Effects of protection: a monopoly of working for 20 years Attenuation of the monopoly through exhaustion of rights...23 Strengthening the monopoly through the patenting of processes...25 Extension of the duration of the monopoly Application of the TRIPS Agreement For industrialized countries: For developing countries: 2000 or For least-developed countries: i

4 Globalization and Access to Drugs 2.7 During the transitional period Establishment of a "mail-box" in Possibility of exclusive marketing rights...30 What happens to existing patents? How can the monopoly be limited? Exceptions...33 Compulsory licences Conclusions: issues at stake and constraints on access to drugs The drug patents debate Some recommendations Definitions and terminology Selected bibliography GATT/WTO and the TRIPS Agreement The TRIPS Agreement and pharmaceutical products Country studies PART II. PRESENTATIONS AT THE AD HOC WORKING GROUP ON THE REVISED DRUG STRATEGY Speech of the WHO Director -General, Dr Gro Harlem Brundtland World Intellectual Property Organization (WIPO) World Trade Organization (WTO) Pharmaceutical Patents and the TRIPS Agreement Overview of the WTO Agreement on Technical Barriers to Trade South Centre Health Action International (HAI) International Federation of Pharmaceutical Manufacturers Associations (IFPMA) International Generic Pharmaceutical Alliance (IGPA) ii

5 Table of contents Abbreviations and acronyms ACP ASEAN DAP DC DSB DSU EU FAO GATS GATT GSP IMF IPR ISO LDC MERCOSUR MFA MFN NAFTA R&D TBT TPRM TRIMs TRIPS UNCTAD UNICEF UPOV WHO WIPO WTO African, Caribbean and Pacific Group (Lomé Convention) Association of South-East Asian Nations Action Programme on Essential Drugs Developing countries Dispute Settlement Body Understanding on Rules and Procedures Governing the Settlement of Disputes European Union Food and Agriculture Organization of the United Nations General Agreement on Trade in Services General Agreement on Tariffs and Trade Generalized System of Preferences International Monetary Fund Intellectual property right International Standards Organization Least-developed countries Southern Common Market Multifibre Arrangement (on international trade in textiles) Most-favoured-nation North American Free Trade Agreement Research and development Agreement on Technical Barriers to Trade Trade Policy Review Mechanism Trade-Related Investment Measures Agreement on Trade-Related Aspects of Intellectual Property Rights United Nations Conference on Trade and Development United Nations Children's Fund International Union for the Protection of New Plant Varieties World Health Organization World Intellectual Property Organization World Trade Organization iii

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7 Part I Globalization and access to drugs: Implications of the WTO/TRIPS Agreement Germán Velásquez Pascale Boulet 1

8 Globalization and Access to Drugs 2

9 Executive summary Executive summary The aim of this document is to inform people in the health sector with no particular legal background about the impact of globalization on access to drugs, and especially about the WTO agreement on intellectual property (TRIPS Agreement) that may have repercussions in the pharmaceutical field. Therefore, the paper is meant to be non-technical in nature and does not deal with all aspects of patents nor of the TRIPS Agreement, but examines the Agreement only from the perspective of public health and access to drugs. The first part gives an introduction to the international trade system from the GATT to the WTO. The second part analyses the section on patents of the TRIPS Agreement in relation to access to essential drugs. The Uruguay Round and the TRIPS Agreement In 1994, the Uruguay Round negotiations culminated in the signature of an agreement instituting the World Trade Organization (WTO). The Organization came into being on 1 January 1995 and had 132 Members in October In deciding to become Members of WTO, States also undertake to abide by its rules. A certain number of treaties on trade in goods and services are annexed to the WTO convention and are therefore binding on all Members. Among these "multilateral" agreements, the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights) will probably have the greatest impact on the pharmaceutical sector. The TRIPS Agreement establishes minimum standards in the field of intellectual property. All Member States have to comply with these standards by modifying, where necessary, their national regulations to accord with the rules of the Agreement. The main change with respect to pharmaceuticals, compared to the pre-existing multilateral conventions, is the obligation to grant patent protection to pharmaceutical product and process inventions. The question of drug patents Previously, the GATT did not address the issue of the level of protection that should be accorded to intellectual property, and Member States had adopted various approaches towards drug patents. While some used to grant patents for pharmaceutical product and process inventions, some others allowed patent protection only for process inventions, thus not preventing local companies from developing different manufacturing processes for drugs that were not patent protected as a product. Other countries did not grant any form of protection for inventions in the pharmaceutical sector. Moreover, the term of protection conferred by a patent varied greatly between countries. Under the TRIPS Agreement, Member States have to grant patents, for a minimum of 20 years, to any inventions of a pharmaceutical product or process that fulfils the established criteria of novelty, inventiveness and usefulness. As soon as the Agreement applies in a Member State, the patent holder should 3

10 Globalization and Access to Drugs therefore have the legal means to defend against copies of patented drugs. If a country fails to bring its legislation in conformity with the TRIPS Agreement as such, it can be the subject of a complaint under the WTO dispute settlement system, and if, after an adverse ruling against it, it still fails to comply, it then may incur trade sanctions authorized by the WTO. When must the Agreement s rules be applied? The TRIPS Agreement allows developing countries a general transition period of five years (up to 2000) to amend their patent legislation in accordance with these new rules, whereas a term of ten years (up to 2005) is available for developing countries which have not yet provided product patent protection for pharmaceuticals, in order to make that change. Least-developed countries are given 11 years, with a possible extension, to harmonize their regulations with the new international obligations. For those countries which did not provide product patent protection for pharmaceuticals already as of January 1995, the Agreement will apply only to new drugs for which a patent application has been made after the entry into force of the WTO Agreement. These applications for pharmaceutical product patents are stored until modified national patent laws are adopted. As of the end of the transition period, the examination of the application has to begin, according to the conditions laid down by the Agreement. If the application is accepted, a patent will be granted for the remainder of the 20-year patent term counted from the date of filing the application. In case the invention obtains a marketing authorization before the entry into force of the new patent regulations, and if another Member State has already allowed such a patent protection for the same invention, the invention s owner may be given exclusive marketing rights for up to five years until the decision to grant or reject the patent application is made. Public health needs and drug patents The Agreement requires all WTO Member States to grant patents for pharmaceutical products or process inventions for a minimum of 20 years. Although social benefits may arise from patent protection through the discovery of new drugs, the TRIPS standards derive from those of industrialized countries and are not necessarily appropriate for all countries level of development. Public health concerns should therefore be considered when implementing the Agreement. The Agreement leaves Member States a certain amount of freedom in modifying their regulations. The terms invention and discovery are not defined in the Agreement, yet how they are defined could have important implications in the biotechnological field. The Agreement says that Member States may provide limited exceptions to the patent holder s exclusive rights in their laws. National public authorities may be allowed, within the conditions laid down in the Agreement, to issue compulsory licences against the patent owner s will when justified by the public interest. The Agreement does not prohibit parallel imports. These restore price competition for patented products by allowing the importation (without the holder s consent) of identical patented products which have been manufactured for a lower price in another country. Member States must be aware of these possibilities when they amend their 4

11 Executive summary legislation. Each country's strategy in regard to globalization of drug production and distribution will have to be incorporated into its national pharmaceutical policy, a component of national health policy. It is essential that all involved in this sector should understand what is at stake and play an active part in the reforms of intellectual property regulations now under way. Therefore, health providers and managers should keep in mind that: The TRIPS Agreement establishes minimum standards in the field of intellectual property All WTO Members have to comply with these standards by modifying their national regulations Public health concerns should be highly considered when implementing the TRIPS Agreement. 5

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13 Introduction Introduction The trade agreements emerging from the Uruguay Round * and globalization* are going to have a significant impact on the global market for goods and services. The production and marketing of drugs and health services could be affected to varying degrees. The Uruguay Round served as a framework for the negotiation of a global agreement on intellectual property rights* (Agreement on Trade-Related Aspects of Intellectual Property Rights - TRIPS*). This Agreement is the part of the Final Act of the Uruguay Round that could have the greatest repercussions on the production of and access to drugs, especially in developing countries. In this context, the Forty-Ninth World Health Assembly in May 1996, adopted a resolution requesting the Director-General to "report on the impact of the work of the World Trade Organization (WTO) with respect to national drug policies and essential drugs". The Action Programme on Essential Drugs* has therefore drawn up a plan of action with the following objectives: To identify issues in the WTO Agreements relating to access to essential drugs and pharmaceutical policies, and to inform Member States about them. To study the implications of globalization for innovation, and for the development, production, marketing and pricing of drugs, so as to identify the possible effects of the TRIPS Agreement and other trade agreements on access to essential drugs. To inform Member States about the need to take steps to protect public health in parallel with the implementation of the new trade agreements. This document is an initial response to the request by the World Health Assembly. After a brief overview of the development of international trade, it gives pointers on how to read the TRIPS Agreement from the perspective of access to drugs. It also seeks to identify how much freedom is left for Member States to regulate the protection of intellectual property, and how they can enact legislation that both conforms with the Agreement and is consistent with health policy. * The words marked with an asterisk are explained in the chapter Definitions and terminology. 7

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15 1. Brief historical background to the international trading system 1. Brief historical background to the international trading system 1.1 The simultaneous creation of the GATT, the IMF and the World Bank The GATT* (General Agreement on Tariffs and Trade) came into being after the Second World War, at a time when new international organizations were being established to build an integrated world economic system. Three major issues had to be addressed for the global economy to emerge from the war and its previous disarray successfully: exchange rates, reconstruction and the organization of international trade in goods. In 1944, responding to each of these questions, the allied nations envisaged the establishment of three new international organizations. The IMF (International Monetary Fund) and the World Bank were established by the Bretton Woods Agreements of July 1944, which were signed by 44 allied nations. The IMF was set up to manage the international monetary system. The management of exchange rates would henceforth be based on a new general principle: the fixed parity of currencies and cooperation between nations. It was implicit that States would no longer be able to freely manipulate the international exchange rate of their currency and all Member States were specifically prohibited from making competitive devaluations unjustified by their economic situation. The World Bank, or as it was named at the time, the International Bank for Reconstruction and Development (IBRD), was initially intended to help the wardevastated European economies to finance production projects. Very soon, however, European reconstruction moved out of its sphere of competence and development financing became its main function. In parallel with the Bretton Woods Conference, the idea of returning to an international trading system based on free trade appeared. This desire was manifested, on the one hand, in the United Nations, by a project for an International Trade Organization, and on the other hand, by the proposal for an international conference for the multilateral reduction of barriers to international trade. The two things led respectively to the "Charter Instituting an International Trade Organization", adopted in March 1948 at the Havana Conference, and a General Agreement on Tariffs and Trade (GATT), which resulted from negotiations between 23 nations that took place from April to December 1947 in Geneva. In practice, the International Trade Organization did not come into being in 1948 as the country that initiated the process did not ratify it. However, the agreement concluded in Geneva - resulting from the first "Round" of multilateral trade negotiations - gradually became institutionalized so that it became more than just a treaty; the GATT (also referred to as the General Agreement) went on to 9

16 Globalization and Access to Drugs become, de facto, the main institutional framework for matters of international trade. 1.2 The objectives, nature and functioning of the GATT Objectives The objectives of the GATT are clearly stated: they are to conclude reciprocal and mutually advantageous arrangements with a view to reducing customs duties and other barriers to trade and eliminating all discrimination in international trade. Nature Since the GATT was not strictly speaking an international organization, it did not have Members but "contracting parties", that is, nations that adhered to the General Agreement. To become a contracting party, a State had to submit its candidature and negotiate concessions relating to customs duties and access to markets with the signatories of the General Agreement. If successful, these negotiations were concluded with a vote by the contracting parties granting this status. The GATT was thus a group of States that had different obligations and rights depending on the degree to which they had adhered to the General Agreement. Obligations of the contracting parties Under the terms of the treaty, each country had to concede most-favourednation* treatment to all other parties. Each signatory State also granted tariff concessions to the other parties, that is, they limited the customs duties imposed on the importation of foreign goods. Signatory States were obliged not to take certain measures that would result in obstacles to international trade. In practice, this type of obligation amounted to a code of good conduct in trade, which Member States undertook to adhere to when they joined the General Agreement. This was principally designed to prevent discrimination between national products and imported products, to regulate the use of anti-dumping measures, to prohibit quantitative restrictions to trade, and to regulate subsidies. Depending on the specific situation and particular characteristics of each State, some exceptions to these obligations were agreed. Certain sectors, namely services, agriculture and textiles, were largely excluded from the scope of the General Agreement. Some States also enjoyed the benefit of special rules. Since the signature of the General Agreement in 1947, developing countries had frequently pointed out that the general principles of the GATT worked against them. But their grievances were not acknowledged until the first United Nations Conference on Trade and Development (UNCTAD) in 1964, when the principle of differential treatment was invoked. UNCTAD has since become a subsidiary body of the United Nations General Assembly, well known for defending the economic interests of developing countries. 10

17 1. Brief historical background to the international trading system The "Rounds" As the essential objective of the GATT was to promote continuing liberalization of international trade, it was necessary to institute a procedure to enable the contracting parties to negotiate in this area. Therefore, rounds of multilateral trade negotiations (MTN) were instigated, during which the tariff concessions accorded by one party to another were generalized to all parties by means of the most-favoured-nation clause. Overall, the earlier rounds of negotiations from 1947 to 1961 led to very substantial reductions in customs duties between the countries concerned. The Kennedy Round, which lasted from 1964 to 1967, led to a further decrease in customs duties on a basis of a formula, and to the negotiation of an agreement on anti-dumping practices. But the contracting parties were not able to agree on the idea of a linear reduction in customs duties or on the problem of non-tariff* barriers which also constituted barriers to trade. It was at the Tokyo Round ( ) that most of the agreements on non-tariff barriers were eventually signed: technical barriers to trade, government procurement, subsidies, customs valuation, import licences and anti-dumping practices. 1.3 The Uruguay Round and the creation of the WTO The new global economic environment At the beginning of the 1980s, it became apparent that the General Agreement was no longer so well adapted to the realities of trade as it had been in the 1950s. The complexity and volume of world trade were now very different from what they had been 40 years earlier. As the globalization of the economy progressed, international investments saw an unprecedented growth, and trade in services - not covered by the GATT rules - began to be a major interest for more and more countries, and was closely bound up with the increase in global trade in goods. The GATT rules were also deemed inadequate in other ways: in the agriculture sector, for example, where the loopholes in the multilateral system were widely exploited and where attempts at liberalization were essentially in vain - and in the field of textiles and clothing, where an exception to the normal GATT areas of influence had been negotiated in the form of the Multifibre Arrangement (MFA). The institutional structure of the GATT and its system for the settlement of disputes were also becoming sources of concern. All these factors were enough to convince GATT Members that a renewed effort should be made to strengthen and enlarge the multilateral system. Long and difficult negotiations The seeds of the Uruguay Round were sown in November 1982 at a ministerial meeting of those GATT Members involved, held in Geneva. But it took four years of effort during which an attempt was made to explore and elucidate the issues at stake and gradually work towards a consensus, before the ministers, 11

18 Globalization and Access to Drugs meeting again in September 1986 at Punta del Este (Uruguay), decided to launch the Uruguay Round. They adopted a programme of negotiations encompassing practically all the outstanding problems of trade policy, including the extension of the trading system into several new fields, in particular services and intellectual property rights. These were the most wide-ranging trade negotiations ever undertaken, and the Ministers gave themselves four years in which to complete them. At the ministerial meeting in Brussels in December 1990, disagreement on the nature of the commitments to be made to reform trade in agricultural products led to the decision to extend the negotiations. In December 1991, a complete draft of the Final Act containing the text of the legal instruments elaborated for all the issues raised at Punta del Este, with the exception of measures relating to access to markets, was presented in Geneva. During the next two years, negotiations oscillated continually between the apparent inevitability of failure and anticipation of imminent success. Several deadlines were set and then not met. Services, access to markets, anti-dumping rules and the proposal to establish the WTO joined agricultural trade as the principal sources of conflict. The differences of opinion between the United States of America and the European Community became the critical issue on which the long desired success of the negotiations came to depend. In the end, the Final Act embodying the results of the multilateral trade negotiations of the Uruguay Round, was signed on 15 April 1994 at Marrakech, Morocco, by Ministers representing most of the 125 governments that had taken part. Today, the WTO has 132 Member States. Twenty-nine countries 1 have filed applications to join, and talks are under way with the working groups that deal with accessions. Previous rounds of negotiations had mainly been confined to discussions of how to eliminate trade barriers at the frontiers between countries, making for an optimal expansion of international trade and better use of the world's wealth. The Uruguay Round was much more ambitious, and was more oriented towards harmonization of national trade policies, particularly in regard to the protection of intellectual property, thereby enlarging the domain of international trade and the jurisdiction of the international organizations active in this field. The results of the Uruguay Round: strengthening and enlargement of the multilateral trade system Strengthening: with the creation of the WTO, a fully fledged international organization with international legal status, its own governing bodies, and rights and obligations came into being. Enlargement: this resulted from the introduction of new areas covered by multilateral trade agreements such as services (GATS*)and intellectual property, as well as a more extensive application in the area of agriculture and textiles countries in August 1998.

19 1. Brief historical background to the international trading system The result of the Uruguay Round is a framework convention, the Agreement establishing the WTO, under which come a variety of multilateral and plurilateral sectoral conventions. Signature of the WTO convention means adhering to all the multilateral conventions (multilateral agreements on trade in goods, General Agreement on Trade in Services, and Agreement on Trade- Related Aspects of Intellectual Property Rights), whereas adhesion to the plurilateral conventions is optional (aeronautics and government procurement). A certain number of simple basic principles run through all the instruments, which together make up the multilateral trading system. Trade without discrimination In accordance with the well-known "most-favoured-nation" clause (MFN), Members are bound to grant other Members products treatment that is no less favourable than the treatment they accord to the products of any other country. Thus, no country can accord special trade advantages to another or discriminate between other countries: all countries are on an equal footing and all share in the benefits deriving from a reduction in the obstacles to trade. Customs unions and free trade areas are the exceptions that are officially authorized (Article XXIV of the GATT of 1947). An Enabling Clause dating from 1979 provides a permanent legal basis for special and differential treatment in favour of developing countries in the area of trade in goods. A second form of non-discrimination, which comes under the heading of national treatment, provides that once products have entered a market, they should not be subjected to treatment less favourable than that accorded to like products of national origin. Predictable and growing access to markets The security and predictability of access to markets depends to a large extent on the use that is made of customs duties. While quotas are prohibited on the whole, customs duties are permitted in the WTO regime and are commonly used by governments to protect national production and to raise revenue. They are, however, subject to certain rules - for example, they must not discriminate between imports - and are to a large extent "bound". Having bound a given customs duty for a specific product, a country may no longer raise it unless compensation is negotiated with the principal suppliers of that product. The key to the predictability of a trade system often lies in the transparency of national legislation, regulations and practices. Several of the WTO agreements contain provisions in this respect. These aim to ensure transparency at the national or multilateral levels by means of formal notifications that must be addressed to the WTO. Promoting fair competition The WTO is not a "free trade" institution, as it is sometimes thought to be, if only because it authorizes the imposition of customs duties and, in limited circumstances, of other forms of protection. It is more accurate to say that it reflects a system of rules designed to ensure free competition that is open and without distortions. The rules on non-discrimination are aimed at ensuring conditions for fair competition, as are the rules on dumping and on subsidies. The GATT rules that defined the conditions in which governments could impose 13

20 Globalization and Access to Drugs 14 countervailing measures to these two forms of "unfair" competition have been expanded and are set out specifically in the WTO agreements. Encouraging development and economic reforms More than three-quarters of the WTO s Members are developing countries and countries in transition towards a market economy. During the eight years of the Uruguay Round - from 1986 to more than 60 of these countries implemented programmes to liberalize trade, sometimes as part of their negotiations to join the GATT, and in some cases independently. At the same time, developing countries and the economies in transition began to play a much more active and influential role in the Uruguay Round negotiations than they did in earlier rounds of negotiations. The provisions of the GATT of 1947 that were intended to favour developing countries remain in place in the framework of the WTO. In particular, Part IV of the GATT of 1994* contains three articles, introduced in These encourage industrialized countries to assist developing countries as a matter of conscious and purposeful effort in their trading activities, and not to expect reciprocity for concessions accorded to developing countries that are inconsistent with their trade development and financial needs. How does the WTO differ from the GATT? The WTO is not simply a continuation of the GATT; it has a completely different character. The main differences are as follows: The GATT was a series of rules, a multilateral agreement without an institutional foundation and with just an ad hoc secretariat, originating from the attempt to establish an International Trade Organization in the 1940s. The WTO is a permanent institution with its own secretariat. The GATT was applied on a "provisional basis" even if, after more than 40 years of existence, governments came to regard it as a permanent commitment. Commitments entered into under the aegis of the WTO exist in their own right and are permanent. The GATT rules applied to trade in goods. The WTO covers not just goods, but also trade in services and trade-related aspects of intellectual property rights. The GATT was originally a multilateral instrument but, towards the 1980s, several new agreements of a plurilateral and hence optional nature were added to it. The agreements* on which the WTO is founded are almost all multilateral and therefore carry with them commitments to which all Members have subscribed. The WTO system for the settlement* of disputes is faster and more automatic, and thus less susceptible to blockages than the former GATT system. The implementation of the decisions resulting from the WTO settlement of disputes will be better assured. The WTO fulfils five essential tasks:

21 1. Brief historical background to the international trading system 1. Administration of the new multilateral trade agreements. 2. Provision of a forum for fresh negotiations. 3. Settlement of disputes. 4. Surveillance of national trade policies. 5. Cooperation with other international bodies in drawing up of economic policies at the global level. 1.4 The protection of intellectual property rights before the WTO Intellectual property law, and especially patent law, is primarily national law. An inventor who files a patent application in a State is asking that State to recognize his exclusive right to his invention within the territorial boundaries of that State. There is not yet a world patent issued by a World Patent Office. The World Intellectual Property Organization (WIPO*), among its other tasks, administers the application of the conventions within its field of competence. But each State alone is responsible for the patents it decides to grant or not to grant on its territory. Thus the monopoly conferred by a patent can only be accorded in States that recognize its existence. Before the Uruguay Round, many States did not issue patents for pharmaceuticals on their territory, which meant that the inventor had no particular right over his invention in that country, hence the proliferation of copies of patented drugs in some countries. At the international level, the regulation and protection of intellectual property rights had previously been managed mainly by WIPO. But WIPO conventions, and in particular the Paris Convention, only impose general rules, such as the rule on national treatment which requires equivalent treatment for foreigners and nationals. Another example is the rule on the right of priority, which permits the organization of protection of a right in several countries. Moreover, these conventions on intellectual property are not binding upon the States that have not ratified them. The GATT itself did not deal with the level of intellectual property protection, although it contains some provisions of relevance in Articles III, IX and XX(d). These provisions were hardly discussed until the GATT ministerial meeting in 1982 brought up the problem of counterfeit goods* in international trade. The pharmaceutical industry in some developed countries had complained of commercial losses due to the weakness of intellectual property rights protection in most of the newly industrializing countries (NIC). Some countries appeared to be influenced by the perception that their competitiveness, dependent on technology and creativity, was not adequately protected worldwide by existing rules on intellectual property. The inadequacies of protection and rules related to IPR s enforcement, together with the absence of an international dispute settlement system led them to argue for the inclusion of intellectual property matters into the trade negotiations. Respect for intellectual property rights would then be made a prerequisite for the granting of the benefits anticipated in the WTO Agreement. Thus intellectual property was added to the agenda of the Uruguay Round trade negotiations. 15

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23 2. Reading the TRIPS Agreement from the perspective of access to drugs 2. Reading the TRIPS Agreement from the perspective of access to drugs 2.1 General presentation of the Agreement A comprehensive Agreement on Trade-Related Aspects of Intellectual Property Rights is annexed to the WTO convention. The objectives, set out in the introduction to the Agreement, are essentially aimed at strengthening and harmonizing certain aspects of the protection of intellectual property at the global level. The Agreement on Trade-Related Aspects of Intellectual Property Rights (hereinafter the Agreement) covers both categories of intellectual property: literary and artistic property (copyright and neighbouring rights) and industrial property (trademarks*, patents*, geographical indications, industrial designs, and trade secrets). These objectives are to be realized in two ways: firstly, the Agreement requires Member States to ensure minimum standards of protection for the various rights, leaving them the choice of how they achieve this. Secondly, WTO Members must make available procedures and remedies to permit the effective enforcement of IPRs by right holders (Part III of the Agreement, not discussed in this document). The minimum standards of protection are based on the basic provisions of the principal international conventions in force (Paris 1883 and Bern 1886, as revised) administered by WIPO, with which the TRIPS Agreement will coexist without taking their place. In all the areas it covers, the Agreement provides for the application of the principle of national treatment and of most-favoured-nation (MFN) treatment. The interests of developing countries are explicitly taken into account. This Agreement, and particularly the section on patents, is probably the element of the Final Act of the Uruguay Round that will have the most important repercussions in the field of public health, especially for access to drugs in developing countries. 2.2 Fundamental principles and objectives of the Agreement: the necessary balance between intellectual property and accessibility It is generally accepted that pharmaceutical products cannot be regarded as ordinary goods or products. In the first place this is because consumers are not in a position to judge, for example, the quality of drugs, hence the need for a monitoring and surveillance system ensured by the State. Secondly, this is because drugs play a significant social role in that they are an integral part of the realization of a fundamental human right - the right to health. That is why they 17

24 Globalization and Access to Drugs 18 are classified as essential goods, to emphasize that they have to be accessible for all people. The concept of accessibility is very important. It means that policies pursued must aim to make drugs available for all who wish to have them, and at affordable prices. If the objective is accessibility, then the best possible supply must be ensured. This objective coincides with the general objective of the GATT for the last 40 years - seeking to eliminate barriers to trade so that consumers have the greatest possible access to all the goods available in the world. The general paragraphs in the TRIPS Agreement (preamble and general provisions) stress the need to promote adequate and effective protection of intellectual property rights, but to do so as part of a series of broader economic objectives. The protection of intellectual property rights is not an absolute and exclusive obligation. The preamble to the Agreement states that: "Members, desiring to reduce distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade;" (authors' emphasis). The protection of intellectual property rights should be adapted to this objective of not generating undue distortions. Protection of intellectual property rights under the TRIPS Agreement should not lead to any discrimination in international trade. It also states that "Recognizing the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives..." This means that the protection of intellectual property rights is not an end in itself but has a functional role to play in relation to the priority objectives of public policy for which these rights were created. It should be harnessed to the service of development. Article 7 - Objectives, but also Article 8 (2), clearly indicates the subordination of the protection of intellectual property rights to public policy objectives in other areas of the State's activity, especially social and economic welfare, which depends in part on national health and social policies. This Article also stresses that the interests of all sectors involved must be taken into account. It states: "The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations." Article 8 - Principles - in paragraph (1) allows national regulations to be adapted to the fundamental objectives of public policy set by governments in certain domains, provided these regulations are not contrary to the provisions of the Agreement. Public health and nutrition receive a special mention among these

25 2. Reading the TRIPS Agreement from the perspective of access to drugs objectives, which amounts to express recognition of measures that might be adopted to guarantee accessibility. By virtue of this Article: "Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement." Paragraph (2) of this fundamental Article should also be mentioned, in so far as it once again expresses the need for a well-balanced interpretation of measures to protect intellectual property rights. These should be protected in such a way that they do not give rise to abuses detrimental to the necessary balance between national objectives and sectoral interests for which the State is the guarantor. Thus, in accordance with Article 8.2: "Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology." At this point, Article 1 - Nature and Scope of Obligations - is of critical importance, for it establishes that Member States are not obliged to grant greater protection than that set out in the Agreement. It also recognizes that Member States are entirely free within the framework of their own legal systems and practices as to how they implement the obligations to which they have subscribed. The Article states that: "Members shall give effect to the provisions of this Agreement. Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement. Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice." These general provisions were included in the Agreement to make for a balance between the rights of patent holders and their obligations vis-à-vis society. Member States may therefore base certain particular provisions of their national regulations on these principles. They can also bring their regulations into line with the obligations of the Agreement in such a way that their national objectives for the protection of intellectual property also accord with those imposed in other sectors of State activity which the latter deems to be necessary, provided such regulations do not contravene the Agreement. From a social and health policy perspective, the provisions open up the possibility of establishing national regulations, taking into account the imperative of guaranteeing the best possible access to drugs. 2.3 Patents for pharmaceutical products and processes available all over the world The TRIPS Agreement requires patent protection to be available for any invention in any field of technology in all WTO Member States. This provision is 19

26 Globalization and Access to Drugs essentially aimed at pharmaceutical products, for which certain developing countries, as well as developed countries, had refused to grant patents. Because of the high prices of patented drugs and the large amount of expenditure required for research and development (R&D*) in the pharmaceutical field, some countries had chosen to imitate products patented in industrialized countries through reverse engineering*, in order to meet their national requirements for drugs at a lower cost and to develop their technology. Other countries with no pharmaceutical industry bought these copies of patented drugs at competitive prices. This is similar to the practice adopted by many developed countries some years ago when their own pharmaceutical industry was not yet very highly developed. Despite the positive contribution that the patent system may bring to public health by generating incentives for innovation, it should be pointed out that the emergence of a generic* drug sector in a number of developing countries represents a set of successful social policies that may be harder to duplicate under TRIPS. The table below gives a detailed explanation of Article 27. Article 27.1 Patentable subject matter... patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application....patents shall be available and patent rights enjoyable without discrimination as to the place of invention the field of technology and whether products are imported or locally produced. Comments Some countries only made available process patents for pharmaceutical inventions. Under TRIPS, product patents must also be available; the protection of rights on a product is much broader in scope. Some countries, unable to invest in R&D, have been excluding pharmaceuticals from patentability so as to allow the possibility for copies of patented drugs to be produced locally or imported - from other countries which also do not respect pharmaceutical patents - without the authorization of the company that invented the drug. Usual definition of the conditions of patentability of an invention. No discrimination between national and foreign inventions, or between foreign inventions. No discrimination between types of products - pharmaceutical or other. Some countries have been issuing compulsory licences for lack of exploitation of patents. This type of obligation was intended to require foreign companies to set up on the national territory in order to exploit their patents, with resultant transfers of technology. The Agreement would here appear to allow these companies to import their patented product without having to transfer the related technology. Henceforth, from the end of the transition periods, patent holders must be given the right and legal means to prevent imitation of a patented drug. If national 20

27 2. Reading the TRIPS Agreement from the perspective of access to drugs regulations on patents do not provide it, or if it is not respected, the Member 21

28 Globalization and Access to Drugs State in question may, pursuant to the disputes settlement process, be the subject of a complaint before the WTO Dispute Settlement Body*. 2.4 Non-patentable inventions: biotechnology inventions As the general rule of the TRIPS Agreement is the patentability of any invention in any field of technology, the only exceptions authorized are those laid down by the Agreement. The Agreement authorizes certain exclusions from patentability*, based on ordre public or morality, especially in regard to protection of human, animal or plant life, or to prevent serious damage to the environment. Members may also exclude diagnostic, therapeutic and surgical methods for the treatment of humans or animals. But the main concern is biotechnological* inventions. Article 27.3(b) provides that only plants, animals and essentially biological processes for the production of plants or animals may be excluded from patentability. However, the same provision states that micro-organisms, as well as micro-biological and nonbiological processes are not covered and have to be patentable. But a doubt remains as to the nature of some of these biotechnological inventions, which find their origin in organisms existing in nature. Indeed, a patent can only be granted for an invention which is new, inventive and capable of industrial application, and not for a discovery. Micro-organisms only seem to be patentable on the condition that a real intellectual human contribution, which has to be new, is demonstrated. Article 27.2 & 3 Exceptions Comments 2. Members may exclude from patentability inventions Two conditions for refusal to grant a patent: the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by domestic law. 3. Members may also exclude from patentability: a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals; b) plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. commercial exploitation (production, distribution, sale) of the product in question is prohibited throughout the territory in the interest of ordre public, morality, or the environment...by any entity whatsoever the only possible justifications for excluding an invention for patentability under this provision are ordre public or morality, including the health and life of humans, animals or plants and the environment. Hence a legal prohibition based on other grounds is not covered by this provision. Specific exceptions allowed are essentially biological processes, plants and animals. But, patents for inventions of micro-organisms and for nonbiological and micro-biological processes must be available. This means that inventions based on genetic engineering and gene transfers should be patentable whereas substances existing in nature should not. 22